LIHEAP IM 2014-2 Common Findings from Compliance Reviews Conducted in FY 2011, 2012, and 2013
LOW INCOME HOME ENERGY
U.S. Department of Health and Human Services
Transmittal No. LIHEAP-IM-2014-2 Date: November 26, 2013
TO: LOW INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP) GRANTEES AND OTHER INTERESTED PARTIES
SUBJECT: Common findings from compliance reviews conducted in FY 2011, FY 2012, and FY 2013.
RELATED Low Income Home Energy Assistance Act, as amended (Title XXVI of
REFERENCES: Public Law (P.L.) 97-35, the Omnibus Budget Reconciliation Act of 1981, as amended).
BACKGROUND: Each year, the Office of Community Services (OCS), pursuant to Section 2608 of the LIHEAP statute, conducts compliance reviews of a sample of grantee programs. These include both on-site and desk reviews. Following the review, a report of any findings is sent to the grantee for its review. Grantees may accept the findings and provide a corrective action plan, or respond to any findings they believe are erroneous.
PURPOSE: This information memorandum summarizes common findings from the compliance reviews conducted by OCS in FY 2011, FY 2012, and FY 2013, with the intent to help LIHEAP grantees avoid future findings and improve program operations. This information memorandum does not list every finding from these compliance reviews. This summary reflects our initial findings; the findings may change in our final reports, pending responses by the grantees who were reviewed.
CONTENT: During our compliance reviews, several issues have proven to be common among many grantees.
Monitoring Weatherization Components
Section 2605(b)(1)(c) of the LIHEAP statute [42 U.S.C. § 8624(b)(1)(c)] permits low-cost residential weatherization assistance. Section 2605(k) of the LIHEAP statute [42 U.S.C. § 8624(k)] permits up to 15 percent of the LIHEAP funds allotted or available in a federal fiscal year to be used for weatherization, unless OCS approves a waiver to obligate up to 25 percent of LIHEAP funds for that year. Although these funds may be expended according to the rules of the Department of Energy’s Low Income Weatherization Assistance Program (WAP), the funds remain LIHEAP funds and cannot simply be transferred into WAP. Accordingly, these funds are not considered obligated until they have been committed to an entity outside the State or Tribe (see LIHEAP-IM-99-11 for further explanation).
Many grantees choose to execute an agreement with another government department or agency for the administration of LIHEAP weatherization assistance. Often this other agency administers the Department of Energy’s Low Income Weatherization Assistance Program (WAP). This arrangement usually involves the interagency disbursement of the portion of LIHEAP funding allocated for weatherization to the other administering agency at the beginning of each program year.
During our compliance reviews, we were encouraged by the overall increased emphasis on monitoring and internal controls. However, we questioned the monitoring regimes of multiple grantees who use the arrangement described above for their weatherization component. In some instances, LIHEAP grantees take a passive stance regarding the weatherization component, relying wholly or in part on the monitoring system of the weatherization agency to ensure funds are being spent properly. This seems to be the case particularly when the local subgrantees used to administer the other LIHEAP components are not the same local subgrantees who administer the weatherization program.
We recommend that LIHEAP grantees who transfer weatherization funds to a different department within the State or Tribe ensure that the LIHEAP office is robustly monitoring the use of those funds to ensure compliance with the LIHEAP statute and regulations. Strategies to ensure adequate monitoring could include: periodic reporting requirements, joint monitoring visits to weatherization subgrantees, and/or inclusion of LIHEAP-specific questions in the monitoring tool used by the weatherization agency to monitor subgrantees.
Timely Delivery of Crisis Assistance
Section 2604(c) of the LIHEAP statute [42 U.S.C. § 8623(c)] requires grantees to ensure that assistance is provided to resolve an energy crisis for eligible households within 48 hours of application, or 18 hours if the situation is life-threatening. In multiple instances we noted a lack of awareness and distinction made between a 48-hour crisis and an 18-hour crisis. We also noted a lack of written procedures to ensure that the required deadlines are met. In addition, there was often little documentation in client files that would help monitors determine whether the deadlines are adhered to.
We recognize that the time limits for crisis assistance can sometimes be challenging to meet. However, we strongly recommend that grantees have written procedures that address the time limits in order to ensure awareness and compliance among staff and subgrantees. This includes having clear definitions of “crisis” and “life-threatening crisis” that are in accordance with the LIHEAP statute. In addition, grantees should be able to document compliance with this provision in order to satisfy reviews by OCS or auditors.
Notice of Fair Hearing
Section 2605(b)(13) of the LIHEAP statute [42 U.S.C. § 8624(b)(13)] requires grantees to create a fair hearing process for applications that are either denied or not acted upon in a timely manner. In general we found compliance with this section. However, in a few instances grantees had inadequate procedures for notifying applicants of their full rights to a fair hearing. In one instance, a subgrantee was not notifying applicants who were approved for benefits of their right to appeal based on timely action. In another instance, a subgrantee was providing no notice of fair hearing rights to applicants at all.
We remind grantees to ensure that applicants are provided written notice of their rights to a hearing for applications that are either denied or not acted upon in a timely manner. Grantees are encouraged to develop written policies for timely action on applications, including standards that incorporate the deadlines for action on crisis applications. Grantees are responsible for monitoring subgrantees’ compliance with both fair hearing rights in a consistent manner.
Section 2605(b)(9) of the LIHEAP statute [42 U.S.C. § 8624(b)(9)] caps the share of LIHEAP funds spent on administrative costs at ten percent (the regulations allow a slightly different calculation for Tribes). Any funds spent on administration that exceed ten percent must be non-federal funds. Multiple grantees were found to have deficiencies in the tracking and allocation of administrative costs. Grantees are reminded to have adequate procedures in place to ensure that no more than ten percent of a grantee’s LIHEAP allocation is spent on administrative costs (see LIHEAP-IM-2000-12 for further explanation).
In addition, grantees should be careful to monitor the cost allocation of subgrantees. Grantees should ensure that activities specific to LIHEAP and administrative in nature are charged to LIHEAP or non-federal sources. This can particularly become an issue when subgrantees administer more than one program, such as the Community Services Block Grant, and staff time is split between programs. Grantees are encouraged to ensure that their subgrantees have adequate time-sheet policies and cost allocation plans, as appropriate.
Several grantees were found to lack proper controls for refunded benefit payments. Grantees are expected to properly track any benefit payments that are refunded by energy vendors, so that they may be credited back to the proper Federal fiscal year, and accurately accounted for on the annual Carryover and Reallotment Report. If a grantee receives a refund that was paid from a grant period that has closed, the funds have expired and must be returned to the Federal government. If the refund is from an open grant period and the refund does not cause the grantee to have carried over more than its maximum ten percent, the funds may be reobligated for allowable LIHEAP purposes.
Documentation for the Leveraging Incentive Program
Grantees who apply for funding under the LIHEAP Leveraging Incentive Program are required to maintain supporting documentation of leveraged resources so that they may be reviewed, if necessary, by OCS or auditors (see 45 C.F.R. § 96.87(g)(8)). The regulation does not require the maintenance of the documentation in the grantee’s own files or systems. However, grantees are reminded that they should ensure that the location of all documentation is known and that the documentation can be provided in a reasonable timeframe, if requested. Grantees’ monitoring should include the resources reported by subgrantees and vendors under the Leveraging Incentive Program.
INQUIRIES: Lauren Christopher, Operations Branch Chief
Division of Energy Assistance
Telephone: (202) 401-4870
Jeannie L. Chaffin
Office of Community Services